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Gold hits new 6-week high, platinum sets new peak

LONDON - Gold hit a new six-week high on Thursday, boosted by firm oil prices and a weaker dollar that traded just above a record low against the euro.

A breach of $675 would set the ground for gold’s move towards $700 an ounce, but the metal remained vulnerable to profit-taking, analysts said.

“The upside momentum is pretty good here. As we broke $672, there was an acceleration in its move higher. Now we are targeting $675 as there is some physical as well as non-physical demand,” said Frederic Panizzutti, analyst at MKS Finance.

“Of course the key and prevailing factor today and tomorrow will be the euro/dollar. Any further weakness in the dollar would continue to feed the gold trend, but any correction would possibly result in profit-taking and a price setback.”

Gold hit a high of $673.95 an ounce, the highest since June 5, and was quoted at $673.00/673.60 by 0948 GMT, against $672.50/673.30 in New York late on Wednesday.

Prices have risen about five percent since falling to a three-month low of $638.90 in late June and are up nearly 7 percent since the end of last year.

The dollar traded near recent record lows against the euro on worries of broader deterioration in credit markets, resulting from distress in the US high-risk mortgage sector.

The US currency was hit by remarks from Federal Reserve Chairman Ben Bernanke who said the US housing market slowdown could last longer than expected and act as a drag on spending and growth in coming quarters.

He is due to give his second day’s testimony to Congress and investors will pay attention to the question and answer session for fresh clues on Fed thinking on the economy, inflation, housing market and risks.

“Given the increasing concerns towards the US economy and the current bear trend in the dollar, gold looks set to benefit further as investors diversify their portfolios,” said James Moore, precious metals analyst at TheBulliondesk.com.

A weaker dollar makes gold cheaper for other currency holders and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation.

Oil resumed its march towards record highs, climbing above $77 a barrel after a surprise drop in gasoline stocks in the United States and heightened supply concerns in Africa.

Platinum has been supported by wage negotiations in South Africa, the world’s largest producer, and Lonmin Plc cutting its platinum sales forecast.

Lonmin, the world’s third-biggest platinum producer, said this week it expected sales of between 820,000 and 840,000 ounces of platinum in the year to Sept. 30, compared with its previous forecast of 980,000 to 1 million ounces.

Platinum rose to a two-month high of $1,320 an ounce and was last at $1,319/1,323, up $1 from its close in New York. Silver edged up to $13.23/13.27 from $13.17/13.22 an ounce, while palladium was up $1 at $366/370 an ounce.